As Sterling exchange rates hit the lowest levels seen since 2008, UK residents travelling abroad will be doing so with less cash in their pockets. This has had the opposite effect for foreign visitors to our country which is enjoying a booming tourist season as bargain hungry visitors spend their holiday money on cut price British merchandise.
In this article about low exchange rates for holiday spending money we shall examine:
- The record low exchange rates
- Consequences for British travellers
- There will be less cash to spend on holiday
- Corner cutting to make the most of spending money
- The benefits of the falling price of sterling for foreign tourists in the UK
- Foreign tourists are snapping up British consumer goods
- How internet sales have been boosted by foreign shoppers
- The benefits for the British tourism industry
Exchange rates for Sterling hit rock bottom levels
During the last few days of August, as families prepare to take off to sunnier shores before the new school term begins in early September, exchange kiosks at Britain’s airports were offering the lowest rates seen since 2008. Fears over Brexit have caused the pound to tumble in value over the last year, hitting the lowest levels since the financial crisis. UK airports were offering as little as 87 cents to the pound as holidaymakers changed their pounds into spending money in the Euro currency.
Airports traditionally offer lower rates that can be found elsewhere as they have to compensate for the large amounts of cash that they hold. Better currency rates can be found at airport kiosks if the money is pre-ordered for collection before travelling. In store and pre-ordered rates can have differences of as much as 50 pounds when 2000 pounds worth of currency is exchanged. Other companies can offer far superior rates and will deliver currency ordered on line to your doorstep without a fee.
What do these low exchange rates mean for British travellers abroad?
British people who will be spending their vacations in European countries this year will have significantly less cash that they would have done the year before. At the beginning of 2017, travel insurer Columbus Direct analysed currency data to show the differences in exchange rates and the cash that has been lost compared to the same time the year before.
It showed that families travelling to the states would get 70 pounds worth less US Dollars than they did the year before. Similar figures for travellers Europe bound, showed that they would have the equivalent of 65 pounds less Euros to spend during their trip. Anyone travelling down under would have 111 pounds-worth less Australian dollars than in 2016. The best places to go, to pack in more value for Sterling, were shown to be Mexico, Japan and Malaysia where exchange rates would see people getting a bit more money that last year.
Savings will have to be made to balance the losses when on holiday
Most people manage to save up enough money for their holidays by having a holiday budget. They save money in various ways and will pick their holiday depending on how much money they have got in the pot, with enough left over for spending money. They know what they usually spend on their holidays and budget accordingly. Many people will be travelling with the same amount as they did in previous years but this year they will be getting less value for their money.
Where can corners be cut on holidays to get the maximum from spending money
Set up a budget for each day to try and spread the cost of the holiday evenly. Do your research before travelling to find the discount travellers passes that are available in many European cities that will have discounts on travel, attractions and events for visitors. To keep check on overspending in restaurants, choose fixed price meals so that you will not go over budget when ordering extras. If you are travelling outside of the European Union you can claim tax back on your purchases. Keep the receipts and hand them in at the airport when you are leaving to receive money back, usually via post.
To keep check on overspending in restaurants, choose fixed price meals so that you will not go over budget when ordering extras.
So what have we learned so far?
- Extremely low exchange rates were offered at UK airport kiosks at the end of August
- Currency can be pre-ordered at airports for better rates
- Currency ordered on-line can be delivered free of charge by some companies
- British holidaymakers will have less money to spend abroad this year
- The best destinations for a good exchange rate this year are Mexico, Japan and Malaysia
- Most people save money all year and then spend it on the best holiday they can afford
- You can save money on holiday by looking out for discounts and shopping tax free
The opposite is true for foreign tourists to Britain
More foreign tourists are forecast to visit our shores in 2017 than previous years with an estimated increase of 6% on last years figures according to the VisitBritain website. Flight bookings for July and August are up 10% to the UK from foreign countries as tourists flock to take advantage of great shopping deals and cheaper holidays. Many of these visitors have been to Britain before so they are more conscious of the great savings that they will enjoy.
Tourists are drawn to great savings on British consumer goods
Americans have started to flock to Britain again after the numbers of visitors had plummeted after the terror attacks on 9/11. They are spending more money too on luxury British consumer goods that can be purchased far cheaper here than in their home country.
Credit card spending by American tourists has risen by 9% as they rush to stock up on bargains. The Chinese tourists in Britain are expected to spend 1 billion pounds on shopping in London this year. The Burberry store in London reports that 70% of their sales are to Chinese tourists and many London shops employ staff who are fluent in Cantonese and Mandarin.
Internet sales for British companies are seeing more purchases by foreigners
The amount of foreigners shopping on-line in British stores has risen dramatically since the devaluation of the pound. With prices for retail shopping goods sometimes much lower that in their own countries, many people are choosing to spend their money in Britain. The figures for on-line retail shopping over the Christmas period in the UK rose by 16% compared to the same time the previous year. More Britons than ever are choosing to shop on the internet, but the figure has been bolstered by foreigners taking advantage of the low value of Sterling to snap up bargains.
It is all good for British tourism
Britain is the eighth most popular tourism destination in the world, attracting millions of foreign visitors every year. The numbers of foreign visitors to our Island have steadily risen for the last six years. The amount of people who are spending their holiday time in Britain has been increased by many Britons, who have taken advantage of the high cost of holidays abroad this year by remaining in Britain for a “staycation”.
Tourism is Britain’s fastest growing industry
Expectations are that by the year 2025 the British tourist industry will be worth a staggering 257 billion pounds. At the moment the tourism industry is responsible for around 3.8 million jobs, that’s 11% of the UK workforce. Foreign tourism provides Britain with 10% of its GDP every year. Spending by foreign tourists has been increasing steadily by 6% a year and is expected to continue doing so. This is great news for the economy and boosts the domestic consumer spending figures that are around 3%. Most of tourist’s cash, around 53% is spent in London, 35% in the rest of England, 8% in Scotland and 2% in Wales.
So what can we conclude about the effect of exchange rates on tourism?
The Euro exchange rate is at an 8 year low resulting in less money for British holidaymakers to spend abroad. Many people are still choosing to travel abroad will less cash in their pockets than in previous years. Holidays abroad can still be enjoyed by budgeting spending money more carefully. The devaluation of the British pound has seen an increase in the amount of tourism in England, both from home and abroad.
The devaluation of the British pound has seen an increase in the amount of tourism in England, both from home and abroad.
Foreigners can enjoy great savings when they purchase British consumer goods due to favourable exchange rates. This is good news for the economy as tourism employs 11% of the workforce and is the fastest growing industry in Britain. The amount of money that foreigners spend every year is a great boost for the retail industry and other tourist related businesses who are suffering, along with all British people due to austerity measures.